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China "Terrifies" Investors With Crackdown: "If You Don't Do What They Ask, There Will Be Blood"
We’ve spent quite a bit of time over the last five months documenting China’s epic “kill the chicken to scare the monkey” campaign.
In the wake of a dramatic unwind in the half dozen or so backdoor margin lending channels that helped to pump some CNY1.5 trillion into Chinese equities during the first half of the year, Beijing embarked on an epic quest to shore up the market. Initially, authorities attempted to stabilize things by pumping hundreds of billions of yuan into the market via CSF. When that became too expensive, the Politburo simply started arresting people.
The witch hunt (and that’s exactly what it is) spread quickly to a number of high profile brokerage houses and before you knew it, China was arresting members of the plunge protection team.
Money managers were so terrified by late September that at least one market participant told a friend to “look after his wife” in the event he didn’t come home after being “summoned” by Chinese investigators.
On November 18, Guotai Junan Chairman and CEO Yim Fung simply disappeared. “We can’t find him,” the company said in a statement. As it turns out, Yim was “taken away” by authorities in connection to an investigation into CSRC vice chairman Yao Gang.
Now, we get a look at the new face behind Xi's crackdown on "malicious" sellers:
That's Fu Zhenghua, who Bloomberg describes as "a 60-year-old former Beijing police chief who led a corruption case against one of China’s richest men and busted a huge prostitution ring in 2010."
Zhang Lifan, a Beijing-based political commentator told Bloomberg that Fu is "a capable assistant to Xi because his cutthroat style would help the investigation get to the very bottom of things, and to make sure things under Xi’s full control."
Yes, Xi needs to "get to the bottom of things"- so much so that Beijing has created a hotline for people to call should they see any short sellers. "They put a notice on all the floors with the number that you can call anonymously to encourage people to dial in," an unnamed source at the abovementioned Guotai Junan told Reuters. "They say they just want people to report corruption."
But tipsters aren't just "reporting corruption", they're angling to get their bosses fired on trumped up charges. "It's creating a very dog-eat-dog environment. People collect evidence on their bosses, because if they get rid of their boss, it means that they can get promoted faster," said a partner at a Chinese mutual who also spoke to Reuters.
At a meeting in July - when the wheels first started to come off for China's equity miracle - Fu told officials from the securities regulator, the police, and the party’s anti-corruption watchdog to be on the look out for "malicious" shorts. Fu has a reputation for no being afraid to ruffle the feathers of powerful Chinese. As Bloomberg documents, he "cut his teeth in investigating financial crimes in 2008, when he put away Huang Guangyu, China’s richest man at the time [who] was sentenced to 14 years in prison for bribery and insider trading." Subsequently, a former Assistant Public Security Minister was convicted of corruption over his links to Huang. He received a suspended death sentence.
Fu's other exploits include an infamous prostitution bust, a campaign against "popular bloggers whose sometimes anti-establishment comments drew the ire of party leaders," and a decree prohibiting police officers from drinking alcohol outside of their homes.
All of this has foreign firms running scared. "Everyone is absolutely terrified of China," a director at an international brokerage in Hong Kong quoted by Reuters said this week. "At the moment, if you don't do what the CSRC asks you to do, there will be blood," another source at a "large US hedge fund" warned.
We'll close with a particularly amusing quote from an attorney who helps foreign firms ensnared by Fu:
"You can't 'comply' because there is no rule of law. The best thing you can do is establish processes for who is likely to be taken away, and how to make sure they aren't disappeared forever."
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Yes China the phoney capitalist state and the exact model favoured by the elite bankers and their useful idiots...things are heading east and very soon!
http://beforeitsnews.com/conspiracy-theories/2015/12/road-to-ww3-time-to...
Stop spamming us with your known disinformation site.
But tipsters aren't just "reporting corruption", they're angling to get their bosses fired on trumped up charges. "It's creating a very dog-eat-dog environment. People collect evidence on their bosses, because if they get rid of their boss, it means that they can get promoted faster," said a partner at a Chinese mutual who also spoke to Reuters.
godless communists........ with no checks on human 'morality' BUT THE WHIMS OF THE STATE People are capable of ANYTHING!
It is the model. We now have the same type of police surveilance state as China's. American slaves have been used up, are non productive and uncooperative because they know the lie. Chinese slaves are hungry, eager, fresh and gullible so it is now their turn to be used. George Soros said China should own the Fascist NWO though he didn't use the word fascist, I did.
From a supporter of free market enterprise, and the U.S. Constitution.
Aw yes, efficient and effective markets where true price discovery occurs....
NOT!
I saw him in the 5 deadly venoms
Can we please send Lloyd Blankfein to China to get his head chopped off to scare the Wall Street monkeys too?
In this environment I think I'd like there to be more than a few people in between me and the "top."
Did you see FU's picture? He's number 1
not going to shed any tears for those maggots
too bad for them their name isn't yu-fung-corzine bitchez
It's all about money and power in this present day dynsty in China known as the communist party.
Same as it ever was - Talking Heads
Your jaw will drop if you don't do what the CSRC says.
Courtesy - future ZH sponsored stories :{
Why anyone does business in that country is beyond me. But then, i guess getting rich selling to a billion captives trumps scruples.
"We FU'ed some folks"
You must be certifiably nuts to put money in the Chinese market at this point. It's obvious they're determined to scapegoat anyone they please as they please for whatever transgression as the political winds dictate. This should do magic to institutional money fleeing China.
There's that awesome Chinese vision at work again.
LMFAO.
You misunderstand. It's a great and well regulated market. You are guaranteed to see your stock rise. You just can't sell it, that's all.
I'm guessing they can sell, as long as not in bulk with the intention of crashing the price? To be fair, they also need to regulate bulk buying too.
"I am #2. You are #6". "Who is number #1?" "That would be telling. Oh wait! It's Fu Zhenghua!"
"I am #2"
"Who is #1?"
"You are, #6"
... (#6 is #1 but doesn't remember. Series ended before they could develop this theme)
Quick, somebody give this guy a job at the CFTC.
Somehow making this a product of Zionism in 3...2...1...
his name is Zenghua, and it was reported by a guy named Zheng, so Z-onism is definitely at work here
that Zappa dude is also real suspicious lookin' if you ask me
Wow, he doesn't look 60!
Maricious showt selles, tied up on a piece of wood, down the river to drown. There's just too much of them.
So, you want laws so you can hire lawyers and obfuscate?
Instruct your investors about risk.
This looks like the start of a lot of Great Leaping.
Where's Jm Rodgers? It's been a while since I've heard him tell us that the Chinese are some of the best capitalists in the world.
seems like a pathetic wimp to me. cowering and banking in China
“The best thing you can do is establish processes for who is likely to be taken away, and how to make sure they aren’t disappeared forever.”
That’s humorous?!
Perhaps it is foresight regarding what’s being done right here in America.
Why, for example, is the Department of Homeland Security (DHS) recruiting, training and protecting informers?
By the act of Congress that established the DHS a system was created by which informers could make false allegations against anyone they please with near-total impunity. Of course, such informers aren’t described as informers; rather they are given the title “submitting person” and the DHS Act provided that their falsehoods will never be examined by any court or legislature or law enforcement agency. The legislation even specifies how this immunity is obtained. The “submitting person” only has to give an “express statement” that his lies were “voluntarily given” and that he expected “protection from disclosure”. It’s all there, in the act that created the DHS.
I’m sorry guys, but silly season is over. Even if you own physical gold, live in a cabin in the woods along with a stash of ammo and AK-47’s, you lose. If you don’t fall to the horde of hungry homeless, you will fall to DHS death squads. All the homeless have to do is to wait until you collapse from lack of sleep (24, 48, 72 hours), then they march in, slit your throat and… let your imagination run wild.
(Incidentally, these DHS death squads will probably be staffed by members of Mexican and Columbian drug cartels, as detailed by government sources (native assassins have proven to be wholly inadequate when it comes to killing neighbors, friends and relatives).
If you own stocks or bonds, guess what: you’re depending on criminal and useless classes to deliver your purchasing power at the moment of their greatest victory. Did I mention something about ‘silly season’?
If you want to survive, you have to combine with others of like mind for the purpose of mutual protection, among other purposes. The big question now is, ‘HOW is this to be done?’ And the quick answer is, ‘You must establish First-Amendment assemblies – the only historically-proven method by which men have made their lives and property secure from rule by thieves.’
The American Revolution, for example, was powered by a large network of such assemblies: from town meetings, county meetings, state conventions and, ultimately, to Continental Congresses.
Let’s be realistic: this solution won’t be easy or quick… unprecedented adventures never are.
In the meantime, we should regard that China is merely a testing ground for what is to be done in the US.
And the quick answer is, ‘You must establish First-Amendment assemblies – the only historically-proven method by which men have made their lives and property secure from rule by thieves.’
Churches and bars seem to the obvious venue ... with a church bar being the favorite.
Hey, cool, a joint Anglo-Chinese ZH venture that encourages everybody to spy on everybody else.
I feel kinda lonely out here on the prairie. They'd have to call me up and ask for directions first, if they wanted to snoop around my place.
Fu flung poo
oh, finally figured out china eh? china is a shithole and has no future.
Kam Fong as Chin Ho, what difference does it make, book em Dano, book em all.
But China is going to roll out a fully specie convertible currency?????
Why would they do that????? SDR membership gives them all that, plus the ability to steal a percentage of the whole world for themselves via the printing press!!
Where's the motivation to slay bankers rather than get in bed with them?????
this mr FU looks a lot like a chinese guy I worked with, his name was Fuk Yu